By Olivia Vicol - 26 October 2021
In his autumn address to the House of Commons, the Chancellor of the Exchequer, Rishi Sunak, offered low-paid workers a 6.6% pay rise, increasing the National Minimum Wage to £9.50. But with inflation expected to rise, energy prices soaring, and Universal Credit sliced, this budget falls short of addressing Britain’s poverty crisis.
National minimum wage set to rise
A much-anticipated promise of the Budget was that the National Minimum Wage would be increased. From 01 April next year, minimum wage for all those ages 23 and over will be set at £9.50, a 6.6% increase on the £8.91 it is today. For someone working a 40 hour week, this is an additional £1,074 a year before tax.
Similar wage rises also apply for younger workers. The National Minimum Wage for people aged 21-22 will rise from £8.36 to £9.18 an hour, and the Apprentice Rate will increase from £4.30 to £4.81 an hour.
But so is the cost of living
If the rise in minimum wage is good news for workers, the rise in the cost of living is not.
The Consumer Prices Index including Housing Costs (CPIH) rose by 2.9% in the 12 months to September. Much of this came from transport, which grew more than in any other month since 2011, but also from housing and household services, where prices were driven up by owner-occupier costs, increases in Council Tax, and rising energy costs. When transport and housing take up a third of a poor family’s weekly spending, the price rises are a serious cause for concern.
Low-earning families are also likely to be hit by an increase in energy costs. The energy price cap, which protects customers from fluctuating energy prices, is likely to increase substantially. If currently, a typical customer pays up to £1,207 a year for gas and electricity, this is expected to climb to £1,660 a year from April.
When we consider rising prices, energy costs, and the increase in taxation announced earlier, the £1,074 wage rise expected from April is modest, at best.
A tough winter ahead for the (under)employed
The budget also shows an alarming level of contempt for people on Universal Credit. Earlier this autumn, the chancellor reversed the temporary £20 uplift introduced during the pandemic, returning the UK to one of the stingiest welfare systems in the developed world.
Faced with rising prices like the rest of the UK, but sidelined from the chancellor’s wage increase measures, unemployed and underemployed Universal Credit recipients are facing one of the toughest winters in recent years.
Migrants at risk
As the whole of the UK is bracing for winter, we are particularly worried about EEA migrants and their family members. The budget promises an additional £700m to be spent on the new post-Brexit borders and immigration system. It is imperative that this goes into supporting migrants to secure their status, not entertaining the spectacle of tougher border policing.
According to the latest Home Office statistics, there is still a huge backlog of 400,000 EU Settlement Scheme applications awaiting a decision. We have written at length about how this lack of status can lead to unemployment, non-payment, and rejection from welfare - even when, in theory, their rights are meant to be protected.
Earlier this month, DWP caseworkers told our team that without EUSS status confirmed, EEA migrants and their family members are ineligible to apply for Universal Credit. Most worryingly, even existing claimants who fail to evidence EUSS status risk having their payments suspended.
Rejected from even this thinnest of lifelines, EEA migrants and their family members who depend on Universal Credit are faced with the prospect of destitution. Last year, our team issued a record number of referrals to food and fuel vouchers - usually to women, and migrants from minority ethnic backgrounds, who already face multiple inequalities. The government must take urgent action to clear the EUSS backlog.
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